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The risk of ownership split in future among the four promoter-brothers of Muthoot Finance cannot be ruled out, says a report of Edelweiss Securities. Muthoot has reacted to the report denying any such possibility.
“We cannot rule out the split of ownership between the brothers in future, hence have listed the ownership pattern as a risk,” the Edelweiss report on the gold loans industry, released today, said.
Muthoot Finance is a Kerala-based non-banking finance company that specialises in gold loans, with assets under management worth Rs 24,400 crore.
“A look at the history tells us that Mr M. George Muthoot, father of the promoters, along with his brothers Muthoot M. Pappachan and Muthoot Mathew, started gold loan business in 1939. However, their businesses split in 1975 and are now run under Muthoot Fincorp and Muthoottu Mini. So, what we see here is that a set of cousins is carrying on similar business under three different companies,” Mr Kunal Shah of Edelweiss has said in the report.
When reached for a comment, Muthoot Finance responded by stressing that there is “absolute peace and unanimity in the family on the company’s growth plans.”
“We have gone through this report. There are lot of other positive things written about the sector and Muthoot Finance. As broking houses have to outline certain risk factors, they have mentioned this as one of the possible risk. This business has been run as a single force with utmost dedication on single product called gold loans. The business of the company has grown many fold under the guidance of all the brothers. There is absolute peace and unanimity in the family on the company’s growth plans,” the company said.
Muthoot is the largest gold financing NBFC with operating history of more than 70 years. At present, it is closely held family owned business with promoters (sons of M. George Muthoot and their family) continuing to hold substantial stake of 80 per cent and the rest is with public. It is registered as a systemically important non-deposit accepting NBFC with the RBI. Headquartered in Kerala, the gold loan NBFC has a network of 3,678 branches, 64 per cent located in South India as of March 2012.
Edelweiss has indeed spoken positively of Muthoot Finance. “Muthoot not only scores higher than banks but also NBFCs. Our liking for Muthoot stems from its operational efficiencies and stronger risk management practices,” the report says. “We expect Muthoot to continue to embark on a steady growth path post the consolidation period, after 2014.”
mramesh@thehindu.co.in
“We cannot rule out the split of ownership between the brothers in future, hence have listed the ownership pattern as a risk,” the Edelweiss report on the gold loans industry, released today, said.
Muthoot Finance is a Kerala-based non-banking finance company that specialises in gold loans, with assets under management worth Rs 24,400 crore.
“A look at the history tells us that Mr M. George Muthoot, father of the promoters, along with his brothers Muthoot M. Pappachan and Muthoot Mathew, started gold loan business in 1939. However, their businesses split in 1975 and are now run under Muthoot Fincorp and Muthoottu Mini. So, what we see here is that a set of cousins is carrying on similar business under three different companies,” Mr Kunal Shah of Edelweiss has said in the report.
When reached for a comment, Muthoot Finance responded by stressing that there is “absolute peace and unanimity in the family on the company’s growth plans.”
“We have gone through this report. There are lot of other positive things written about the sector and Muthoot Finance. As broking houses have to outline certain risk factors, they have mentioned this as one of the possible risk. This business has been run as a single force with utmost dedication on single product called gold loans. The business of the company has grown many fold under the guidance of all the brothers. There is absolute peace and unanimity in the family on the company’s growth plans,” the company said.
Muthoot is the largest gold financing NBFC with operating history of more than 70 years. At present, it is closely held family owned business with promoters (sons of M. George Muthoot and their family) continuing to hold substantial stake of 80 per cent and the rest is with public. It is registered as a systemically important non-deposit accepting NBFC with the RBI. Headquartered in Kerala, the gold loan NBFC has a network of 3,678 branches, 64 per cent located in South India as of March 2012.
Edelweiss has indeed spoken positively of Muthoot Finance. “Muthoot not only scores higher than banks but also NBFCs. Our liking for Muthoot stems from its operational efficiencies and stronger risk management practices,” the report says. “We expect Muthoot to continue to embark on a steady growth path post the consolidation period, after 2014.”
mramesh@thehindu.co.in
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